Correlation Between Buffalo High and Calamos High

Can any of the company-specific risk be diversified away by investing in both Buffalo High and Calamos High at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Buffalo High and Calamos High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Buffalo High Yield and Calamos High Income, you can compare the effects of market volatilities on Buffalo High and Calamos High and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Buffalo High with a short position of Calamos High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buffalo High and Calamos High.

Diversification Opportunities for Buffalo High and Calamos High

0.88

Correlation Coefficient

Buffalo High  Calamos High

Very poor diversification

The 3 months correlation between Buffalo and Calamos is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Buffalo High Yield and Calamos High Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calamos High Income and Buffalo High is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Buffalo High Yield are associated (or correlated) with Calamos High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calamos High Income has no effect on the direction of Buffalo High i.e., Buffalo High and Calamos High go up and down completely randomly.

Pair Corralation between Buffalo High and Calamos High

Assuming the 90 days horizon Buffalo High is expected to generate 3.72 times less return on investment than Calamos High. But when comparing it to its historical volatility, Buffalo High Yield is 1.03 times less risky than Calamos High. It trades about 0.04 of its potential returns per unit of risk. Calamos High Income is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  768.00  in Calamos High Income on December 22, 2024 and sell it today you would earn a total of  11.00  from holding Calamos High Income or generate 1.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Buffalo High Yield  vs.  Calamos High Income

Buffalo High Yield

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Buffalo High Yield are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Buffalo High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Calamos High Income

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Calamos High Income are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Calamos High is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Buffalo High and Calamos High

The main advantage of trading using opposite Buffalo High and Calamos High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buffalo High position performs unexpectedly, Calamos High can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Calamos High will offset losses from the drop in Calamos High's long position.

The idea behind Buffalo High Yield and Calamos High Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.